International Inconsistencies In Patent Prosecution

Transcription

Westlaw Journal
INTELLECTUAL PROPERTY
Litigation News and Analysis • Legislation • Regulation • Expert Commentary
WHAT’S INSIDE
CERTIORARI
9 Justices agree to hear
Lexmark false-advertising
case
Lexmark Int’l v. Static Control
Components (U.S.)
COPYRIGHT INFRINGEMENT
10 Justin Bieber, Usher sued
for $10 million for copyright
infringement
Copeland v. Bieber (E.D. Va.)
11 Singer accuses country music
stars of copyright infringement
Bowen v. Paisley (M.D. Tenn.)
COMMENTARY
Reverse payments, generic and brand-name drugs,
and consumer impact
Intellectual property and patent attorney
Kirby Drake of Klemchuk Kubasta LLP
offers her perspective on the current
state of “reverse payments” between
drug companies. The payments are
meant to keep generic competition
away from name-brand originator drugs.
Drake considers whether the U.S.
Supreme Court may soon offer the final
word on the legality of the practice.
SEE PAGE 3
PATENTS
12 Obama takes action to curb
frivolous patent lawsuits
TRADEMARK INFRINGEMENT
13 Flea market owner must pay
$5 million for contributory
infringement
Coach Inc. v. Goodfellow
(6th Cir.)
15 Philip Morris accuses Bronx
delis of selling fake Marlboros
Philip Morris USA v. 3473
Quick Stop Inc. (S.D.N.Y.)
16 Trademark suit failed to show
video game title infringed
company name
Rebellion Dev. v. Stardock
Entmt. (E.D. Mich.)
17 Reynolds says online e-cig
vendor stole Eclipse
trademark
Reynolds Innovations v.
Snowcap Distrib. Corp.
(M.D.N.C.)
TRADE SECRETS
18 Panel urges tougher U.S.
response to trade secret theft
41391930
VOLUME 20, ISSUE 4 / JUNE 12, 2013
REUTERS/Brendan McDermid
The U.S. Supreme Court is being asked to consider whether reverse
payment settlements are lawful.
COMMENTARY
International inconsistencies in patent prosecution:
5 ways to avoid inequitable conduct
Attorney Wesley Overson of Morrison & Foerster explains several steps that patent
applicants can take to ensure that they do not face charges of inequitable conduct
in the process of obtaining a patent.
SEE PAGE 7
Appeals court revives trademark claims against
Oprah Winfrey
By Deborah Nathan, Senior Legal Editor
Media mogul Oprah Winfrey is once again facing allegations of trademark
infringement now that a federal appeals court has reversed a judge’s decision to
dismiss a motivational program owner’s claims against her.
Kelly-Brown et al. v. Winfrey et al., No. 12-1207cv, 2013 WL 2360999 (2d Cir. May 31, 2013).
Your Power” mark claimed by plaintiff Simone
Kelly-Brown.
The 2nd U.S. Circuit Court of Appeals said it
disagreed with the judge’s conclusion that
Winfrey demonstrated fair use of the “Own
“The biggest victory is one for the smallbusiness owner,” Kelly-Brown’s attorney, Patricia
CONTINUED ON PAGE 19
TABLE OF CONTENTS
Westlaw Journal
Intellectual Property
Trademark Infringement: Kelly-Brown v. Winfrey
Appeals court revives trademark claims against Oprah Winfrey (2d Cir.).........................................................1
Published since August 1989
Publisher: Mary Ellen Fox
Executive Editor: Donna M. Higgins
Managing Editor: Donna M. Higgins
Senior Attorney Editor: Deborah Nathan, Esq.
[email protected]
Commentary: By Kirby Drake, Esq., Klemchuk Kubasta LLP
Reverse payments, generic and brand-name drugs, and consumer impact................................................... 3
News in Brief.......................................................................................................................................................6
Commentary: By Wesley Overson, Esq., Morrison & Foerster
International inconsistencies in patent prosecution: 5 ways to avoid inequitable conduct............................ 7
Managing Desk Editor: Robert W. McSherry
Senior Desk Editor: Jennifer McCreary
Certiorari: Lexmark Int’l v. Static Control Components
Justices agree to hear Lexmark false-advertising case (U.S.)...........................................................................9
Desk Editor: Sydney Pendleton
Westlaw Journal Intellectual Property
(ISSN 2155-0913) is published biweekly by
Thomson Reuters.
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www.copyright.com.
Copyright Infringement: Copeland v. Bieber
Justin Bieber, Usher sued for $10 million for copyright infringement (E.D. Va.)............................................ 10
Copyright Infringement: Bowen v. Paisley
Singer accuses country music stars of copyright infringement (M.D. Tenn.)...................................................11
Patents
Obama takes action to curb frivolous patent lawsuits.....................................................................................12
Trademark Infringement: Coach Inc. v. Goodfellow
Flea market owner must pay $5 million for contributory infringement (6th Cir.)...........................................13
Trademark Infringement: Philip Morris USA v. 3473 Quick Stop Inc.
Philip Morris accuses Bronx delis of selling fake Marlboros (S.D.N.Y.)............................................................15
Trademark Infringement: Rebellion Dev. v. Stardock Entmt.
Trademark suit failed to show video game title infringed company name (E.D. Mich.).................................16
Trademark Infringement: Reynolds Innovations v. Snowcap Distrib. Corp.
Reynolds says online e-cig vendor stole Eclipse trademark (M.D.N.C.).......................................................... 17
Trade Secrets
Panel urges tougher U.S. response to trade secret theft.................................................................................18
Recently Filed Complaints from Westlaw Court Wire.................................................................................20
Case and Document Index................................................................................................................................21
How to Find Documents on Westlaw
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filing is listed at the bottom of each article
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2 | WESTLAW JOURNAL
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© 2013 Thomson Reuters
COMMENTARY
Reverse payments, generic and brand-name drugs,
and consumer impact
By Kirby Drake, Esq.
Klemchuk Kubasta LLP
Patent, regulatory and antitrust issues may
intersect when generic and brand-name
drugs are both available on the market for
consumers even when patent protection
still attaches to the brand-name drug. This
availability of both generic and brand-name
drugs can sometimes arise based on reverse
payment settlements.
Reverse payment settlements have been a
source of controversy in the pharmaceutical
industry as they arise when a brand-namedrug manufacturer makes a payment to a
generic-drug company to postpone for a
period of years any marketing or sale of the
generic version of the brand-name drug.
In order to understand reverse payment
settlements and the issues currently being
addressed by the U.S. Supreme Court, some
background on the regulations related to
making both brand-name and generic drugs
available on the market will be provided.
With a backdrop of what reverse payment
settlements are, the arguments in favor of
and against reverse payment settlements
will be addressed. Finally, this commentary
will provide some evaluations about the
future of reverse payment settlements and
the effects on the pharmaceutical industry
and consumers.
THE NDA AND ANDA PROCESS
The Federal Food, Drug and Cosmetic Act,
21 U.S.C. § 9, requires a manufacturer of a
new drug to seek approval from the Food
and Drug Administration by filing a new
drug application before placing the drug
on the market. If the drug is approved, it
is generally referred to as a “brand name”
drug and will then be listed in the Approved
Drug Products with Therapeutic Equivalence
and Evaluations Book (aka the Orange Book).
The FTC contends that reverse payment
settlements should be declared unlawful as a
general rule because they are anti-competitive.
When an applicant submits an NDA, it
must submit information about the patents
believed to cover the brand-name drug. If
the FDA approves the brand-name drug, the
manufacturer is granted exclusive marketing
rights if the statutory requirements are met.1
This exclusivity was meant to promote a
balance between new drug innovation and
generic drug competition.
If a generic-drug maker wishes to make a
generic version of a brand-name drug listed in
the Orange Book, the Drug Price Competition
and Patent Term Restoration Act, 21 U.S.C.
§ 355(b) (known as the Hatch-Waxman Act),
provides that the generics maker can file an
abbreviated new drug application to get its
drug on the market before the expiration of
the term of patents listed in the Orange Book
as covering the brand-name drug.
The ANDA process was put into place to
encourage earlier marketing of generic
Kirby Drake, a partner with Klemchuk Kubasta LLP in Dallas, focuses
on all aspects of intellectual property litigation and patent prosecution. Skilled in patent preparation with emphasis on chemical and computerrelated matters, she is registered to practice before the U.S. Patent and
Trademark Office. In addition to her law degree, Drake has a B.S. in
chemistry from Duke University and is an active member of the American
Chemical Society, where she serves in a number of leadership roles.
drugs and, perhaps even more so, to give
consumers the benefit of lower prices to
obtain such generic drugs. The ANDA
process essentially allows the generics maker
to prepare its generic drug to be marketed
without providing separate proof that the
product is safe and effective for use (which a
brand-name drug maker must show to have
its product included in the Orange Book).
Instead, the generics maker merely must
show that the generic drug has the same
active ingredients as the brand-name drug
and will be “bioequivalent” (that is, will have
the same effect on the human body as the
brand-name drug).
In filing its ANDA, a generics maker must
explain how its proposed drug can be
marketed without infringing the patents
listed in the Orange Book related to the
brand-name drug.
Generics makers
generally elect to file a Paragraph IV certification that alleges that one or more of the
patents listed in the Orange Book related to
the brand-name drug “is invalid or will not
be infringed by the manufacture, use or sale
of the [generic] drug.”2
If a generics maker files an ANDA making
these types of certifications, this is considered
to be a statutory act of patent infringement.
When a Paragraph IV certification is made,
the brand-name-drug maker holding the
patents at issue has 45 days to file a patent
infringement lawsuit against the generics
maker.
If the generics maker is successful in the
lawsuit, it may enter the market earlier than
the term of the patent(s) at issue, but if it is
unsuccessful, the generic drug must remain
off the market until the patent expiration.
JUNE 12, 2013
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VOLUME 20
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ISSUE 4 | 3
RISKS AND REWARDS IN ANDA
LITIGATION
to continue to challenge the scope, validity or
enforceability of the patents.
ANDA litigation provides potential risks
as well as rewards for both manufacturers
of both brand-name and generic drugs.
Although Hatch-Waxman was designed not
to foment litigation for its own sake, but “to
speed the introduction of low-cost generic
drugs to market,”3 when a generics maker
files an ANDA, it tends to result in protracted
litigation.
It is a reverse payment because the payment
is moving in the opposite direction than
what is typically seen in patent infringement
litigation (when an accused infringer pays
the patent holder for a license to provide its
product in the marketplace).
This may be because the brand-name-drug
maker is incentivized to attempt to keep the
generic drug off the market until the patent
expiration and can only do so through ANDA
litigation when it is triggered. Further, if
the brand-name-drug maker files a lawsuit,
the FDA automatically stays its approval
process with respect to the generic drug for
30 months. However, there are risks for the
brand-name-drug maker in filing the lawsuit.
For example, it runs the risk that its patent(s)
may be declared invalid or unenforceable
during the litigation. If the patent is not
infringed, valid or enforceable, there may be
little or no bar for the generics maker to enter
the market and compete against the brandname drug. This risk is why some (such as
the Federal Trade Commission) believe that
brand-name-drug makers enter into reverse
payment settlements.
If the generics maker loses the ANDA
litigation, it could be kept out of the market
for longer than a reverse payment settlement
may provide because the generics maker
that loses ANDA litigation cannot market its
product until the patent expires.
In contrast, if a reverse payment settlement
is reached, consumers may have access to
the generic drug before the patent expires,
thereby fostering competition even within
the boundaries of the patent term. The riskreward for a generics maker is particularly
evident when considering that generics
companies’ “win” rate in ANDA litigation is
slightly less than 50 percent.4
REVERSE PAYMENT SETTLEMENT
AGREEMENTS
Reverse payment patent settlements occur
when the brand-name-drug maker (patent
holder) agrees to make a payment to the
generics maker to resolve ANDA litigation.
In exchange for the payment, the generics
maker may agree to not enter the market for
a period of time and generally may agree not
4 | WESTLAW JOURNAL
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(about $19 million to $30 million per year),
likely because Watson was the first to file an
ANDA and would have been given a period
of generic exclusivity if it had successfully
challenged Solvay’s patent.
The parties reported the settlements to
the FTC (as they are required to do), but
the FTC objected, alleging the settlements
The FTC says these settlements directly
restrict output and raise prices and are therefore
anti-competitive and harmful to consumers.
While there is an automatic 30-month stay
of FDA approval of the generic drug when
a brand-name-drug maker files an ANDA
lawsuit, ANDA litigation can last for several
years, sometimes beyond the length of
the stay. As such, the brand-name-drug
maker could run the risk that the FDA may
approve the generic drug before the litigation
resolves.
This FDA approval could occur regardless of
whether the proposed generic drug infringes
the patent that is the subject of the ANDA
litigation or whether the patent is valid. To
mitigate this risk, brand-name-drug makers
may sometimes elect to enter into reverse
payment settlement agreements before the
expiration of the 30-month stay.
This was the case with ANDA litigation related
to AndroGel, a testosterone replacement
therapy offered by Solvay Pharmaceuticals
(now known as AbbVie Products, a subsidiary
of Abbott Laboratories).
CHALLENGES IN THE SUPREME
COURT
Watson Pharmaceuticals Inc., Paddock
Laboratories Inc. and Par Pharmaceuticals
Co. each sought to introduce generic versions
of AndroGel into the market. Each filed
ANDAs and, in response, Solvay filed ANDA
litigation.
After some time, the parties entered into
a settlement to resolve the litigation. The
generics makers agreed not to enter the
market with generic AndroGel until Aug. 31,
2015, and in return, Solvay agreed to pay
$10 million a year for six years and an
additional $2 million a year for backup
manufacturing assistance to Par/Paddock.
Solvay agreed to share some of its profits
with Watson through September 2015
were unlawful attempts to defer generic
competition and allowed the parties to share
monopoly profits at consumers’ expense.
The U.S. Supreme Court is now being asked
to consider in FTC v. Actavis Inc., No. 12-416,
oral argument held (U.S. Mar. 25, 2013),
whether these types of reverse payments
made to end ANDA litigation are lawful.
THE FTC’S POSITION
The FTC contends that reverse payment
settlements should be declared unlawful
as a general rule because they are anticompetitive. The agency says that declaring
these settlements unlawful will serve the
purposes of patent law and competition law.
Specifically, the FTC claims these settlements
directly restrict output and raise prices and
are therefore anti-competitive and harmful
to consumers. Further, the FTC argues that
the patent laws do not give a patent holder
the right to induce potential competitors to
stay out of the market.
ARGUMENTS FOR REVERSE
PAYMENT SETTLEMENTS
Some call reverse payment settlements
“pay for delay,” but this is a somewhat unfair
moniker insofar as generics makers often
are able to enter the market through these
types of settlements faster than they would
have been able to do so if they had been
unsuccessful in the ANDA litigation.
In fact, Hatch-Waxman explicitly recognizes
settlement as a valid basis for a court to
lift the patent-based restrictions that bar
the FDA from approving a generic-drug
application.5 Thus, the explicit terms of
Hatch-Waxman recognize settlements as
a valid basis for terminating the patent
challenge and authorizing FDA approval of a
generic drug prior to patent expiration.
Allowing the generic product to come to
market before the patent expires therefore
may provide a pro-competitive result, even if
the generics maker is somehow compensated
for agreeing to a compromise in its market
entry date.
For example, Teva Pharmaceuticals, a
generics maker, estimated in 2009 that in
total, its reverse payment settlements had
“removed 138 years of monopoly protection”
and thereby provided $128 billion in savings
to consumers through early generic entry.6
In another example, generic equivalents
of Lipitor, the best-selling prescription
medicine of all time, became available in
November 2011 because of reverse payment
settlements. If, instead of settling, the parties
had proceeded with the patent litigation
and the brand-name-drug maker had won,
generic entry would not have occurred until
early 2017. As such, this earlier entry of a
lower-cost alternative is projected to save
consumers as much as $4.5 billion per year
by 2014.
Those in favor of allowing reverse payment
settlements (both brand-name and genericdrug makers) generally counter the FTC’s
position by arguing that the settlements
should not be deemed unlawful unless
“courts can predict with confidence that [a
patent] would be invalidated in all or almost
all instances under the rule of reason.”7
Those opposing the FTC’s position also
allege that the declaring these agreements
unlawful may lead to consumer harm in the
form of fewer generic patent challenges and
reduced innovation. They also contend that
the FTC’s position seems to treat patents as
though they are presumptively invalid even
though the Patent Act provides that a patent
is “presumed valid.”8
days if it is successful in ANDA litigation.
Apotex alleges that if a settlement is reached
between the patent holder and the first filer,
it presents a barrier to entry for later-filing
generics makers because the likelihood is
that the first filer maintains the 180-day
exclusivity despite the settlement of the
ANDA litigation. This window of exclusivity
for the first filer may be worth millions of
dollars.
Apotex also is troubled by reverse payment
settlements providing that the settling
generics maker may immediately enter the
market if another generics maker is later
successful in invalidating the patent. Apotex
contends that this discourages other generics
makers from challenging a patent that is
subject to a reverse payment settlement.
However, Apotex is a generics maker that has
done so.
For example, in Apotex Inc. v. Cephalon
Inc., the company challenged a patent that
was subject to several reverse payment
settlements.9 Apotex has alleged that there
were unique incentives to challenge this
patent, but regardless, generics makers still
do make such challenges even when reverse
payment settlements are in place.
Others question whether reverse payment
settlements are merely a vehicle for brandname and generics makers to share an
increased pool of profits. Further, reverse
payment settlements can be detrimental
to consumers by allowing brand-name and
generics makers to agree to keep lower-cost
generic drugs off the market.
WHAT’S NEXT?
While many brand-name and generic-drug
makers have taken the position that reverse
settlement payments should be permitted,
there are some that disagree, such as Apotex
Inc., a prominent generics maker.
While consumers would like to see lower
prices for drugs and more availability of drugs,
it is hard to deny that drug development
comes at a cost. The average drug takes 10
to 15 years to develop at a cost of more than
$1.3 billion.
A patent grants the patent holder a limited
monopoly, so reverse payment settlements
raise the question of whether a patent holder
should have the ability to enter into such
agreements to enforce its monopoly. Patents
by their very nature allow for exclusion of
would-be competitors unless the Patent
and Trademark Office or the courts fully and
finally conclude otherwise.
Accordingly, the Supreme Court may
indirectly consider whether brand-namedrug makers holding patents are being (or
should be) afforded fewer rights under the
patent laws because they are selling drugs
when patent holders in other industries are
not being similarly restricted by the FTC.
Another unresolved question is whether
a reverse payment settlement should be
viewed any differently from a patent license
agreement. With a typical patent license
agreement, the licensee wants to use the
patented invention for a fee, while, with a
Patent laws do not give a patent holder
the right to induce potential competitors to stay
out of the market, the FTC says.
ARGUMENTS AGAINST REVERSE
PAYMENT SETTLEMENTS
Apotex’s position focuses on the idea that
the first generics maker to file an ANDA
related to a given brand-name drug is likely
to benefit the greatest from reverse payment
settlements that may arise in ANDA litigation
insofar as the first ANDA filer generally gets
the benefit of market exclusivity for 180
to a compromise generic entry date but no
consideration may be provided to bridge
the gap in opinions over the strength and
coverage of the patent at issue, it may be
increasingly unlikely that any settlements
will be reached.
The patenting process and the NDA process
have traditionally given brand-name-drug
makers incentives to incur the time and
cost to bring a drug to market. If reverse
payment settlements are deemed unlawful,
and the parties can only settle by agreeing
reverse payment settlement, the alleged
infringer (the generics maker) agrees not to
use the patented invention for a fee.
Yet another question is whether the courts
should really be considering this issue at
all, as it appears to be more public-policyrelated and therefore an issue that Congress
should address. However, legislators have
not taken action though having had several
opportunities to do so.
For example, Congress enacted sweeping
patent litigation in the past several years
but elected not to address reverse payment
settlements. Further, Congress has had a
chance to address through other pieces of
legislation, including the Preserve Access to
Affordable Generics Act, which would have
made it illegal for a branded pharmaceutical
company to settle a claim in Hatch-Waxman
litigation by giving anything of value to the
generics company unless approved by the
FTC.
JUNE 12, 2013
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VOLUME 20
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ISSUE 4 | 5
However, this legislation did not pass, and
has not passed, despite having been raised
on numerous occasions since 2006.
Ultimately, it remains to be seen how the
Supreme Court will resolve the question
of whether reverse payment settlements
should be permitted, but from what has been
revealed from the court’s questioning, the
justices appear to be conflicted on the issue,
just like the pharmaceutical industry and the
general public. The high court should issue
its decision by early summer. WJ
NOTES
1
21 C.F.R. § 314.108.
21 U.S.C. § 355(j)(2)(A)(vii)(IV).
2
Caraco Pharm. Labs. v. Novo Nordisk A/S, 132
S. Ct. 1670, 1676 (2012).
3
21 U.S.C. §§ 355(j)(5)(B)(iii)(I), (II).
5
See Press Release, Teva Pharms. USA, Teva
Pharmaceuticals Issues Statement in Response
to Federal Trade Commission Claims on Patent
Settlements (June 24, 2009), available at http://
tinyurl.com/TevaStatement.
6
Leather Prods. v. PSKS Inc., 551 U.S. 877
(2007).
See Generic Pharmaceutical Association
Amicus Curiae Brief, at 5, FTC v. Actavis Inc.,
No. 12-416, amicus brief filed (U.S. Feb. 28, 2013),
available at http://sblog.s3.amazonaws.com/
wp-content/uploads/2013/03/12-416-bsacGeneric-Pharmaceutical-Association1.pdf.
7
LEGAL SOFTWARE COMPETITORS
CONTINUE FIGHT IN FLORIDA
NEXIUM MAKER ACCUSED OF
PAY-TO-DELAY CONSPIRACY
SUIT: GOOGLE SELLS TRADEMARK
TO ADVERTISERS
Finding that unresolved factual issues
remain in law firm software provider Probill
Inc.’s trade-secrets and unfair-competition
lawsuit against competitor Cumbie Law
Office Automation Consulting Inc. and its
owners, a Florida federal judge has denied
the defendants’ dismissal motion. According
to the opinion, Cumbie and Probill sold
competing software services to law firms
until they merged in 2010. Two years later,
the companies decided to go separate ways,
purportedly agreeing to take the clients
they brought to the joint venture, the judge
said. Probill’s suit alleges, however, that the
defendants sent a misleading marketing
email to Probill’s client list, the judge said.
Although the defendants argue the email
was not false or misleading as a matter of
law, the judge refused to dismiss the suit,
saying it raises a “classic question of fact.”
AstraZeneca, the maker of heartburn
medication Nexium, has been accused of
paying three generics manufacturers to
delay creating generic copies of the drug.
Supermarket chain Giant Eagle says in a
lawsuit filed in the U.S. District Court for
the Western District of Pennsylvania that
the generics companies could have started
making the drug in 2008 but have delayed
production until next year. The plaintiff
says it has been overpaying for the drug
during this time period because it could have
been buying generic versions if not for the
companies’ conspiracy. The lawsuit accuses
AstraZeneca and the generics companies
of violating federal antitrust laws and seeks
recovery of treble damages to be determined
at trial.
Parts.com LLC, which runs a website selling
car parts and accessories, has sued Google
in San Francisco federal court, saying
the search engine’s advertising program
infringes and dilutes its trademarked name.
According to the suit, the car website
trademarked “Parts.com” in 2008, but
Google allows third parties to buy the name
as a keyword through AdWords, its online
advertising program.
Using AdWords,
companies can sponsor links that show
up at the top of search results for certain
keywords. Typing Parts.com into Google’s
search engine retrieves sponsored links
to competing websites or companies that
have no affiliation with the brand, confusing
consumers and diverting traffic away from
the business, the complaint alleges. The suit
also charges Google with unfair competition
and deceptive trade practices. It seeks
injunctive relief and damages.
4
35 U.S.C. § 282(a).
8
No. 2:06-cv-2768, 2011 WL 6090696 (E.D.
Pa. Nov. 7, 2011), No. 12-1417, 500 Fed. Appx. 959
(Fed. Cir. Apr. 8, 2013).
9
NEWS IN BRIEF
Probill Inc. et al. v. Cumbie Law Office
Automation Consulting Inc. et al.,
No. 12-80821-CIV, 2013 WL 2158431
(S.D. Fla. May 17, 2013).
Giant Eagle Inc. v. AstraZeneca LP et al.,
No. 13-cv-00658, complaint filed (W.D. Pa.
May 8, 2013).
Related Court Document:
Complaint: 2013 WL 1915796
Opinion: 2013 WL 2158431
6 | WESTLAW JOURNAL
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Parts.com LLC v. Google Inc., No. 13-CV1074, complaint filed (S.D. Cal. May 6, 2013).
COMMENTARY
International inconsistencies in patent prosecution:
5 ways to avoid inequitable conduct
By Wesley Overson, Esq.
Morrison & Foerster
Patent applicants face different challenges
in different jurisdictions. To address the
varying concerns of local patent offices,
creative prosecutors in different countries
often take positions that may appear
inconsistent regarding, for example,
what the patent disclosure means, what
the person of ordinary skill would know
and what the prior art discloses. Should
in-house counsel managing international
prosecution be concerned about this? Even
after Therasense,1 the answer is still yes.
Failing to disclose inconsistent statements
not disclose to the U.S. examiner its prior
position before the European Patent Office,
even though its declarants knew what Abbott
had said in Europe. The U.S. court found that
this failure to disclose the prior inconsistent
statements constituted inequitable conduct. On appeal, in an en banc ruling, the U.S.
Court of Appeals for the Federal Circuit
established a more stringent standard
for inequitable conduct, requiring a more
rigorous showing of intent and proof of
“but for” materiality. A party asserting
When inconsistencies happen, disclose them.
Don’t be tempted not to disclose.
regarding material matters can still qualify
as inequitable conduct. This commentary
explains how that can happen and what
you can do to avoid inequitable conduct if
you discover that your company has taken
arguably inconsistent positions in different
jurisdictions.
In Therasense, the plaintiff Abbott
Laboratories secured a European patent
related to blood glucose testing by pointing
out that its application did not require
the use of a filter. Later, that same Abbott
invention was cited as prior art against one of
Abbott’s own U.S. patent applications. To get
around its own prior art, Abbott submitted
declarations stating that its prior invention in
fact required the use of a filter. Abbott did
inequitable conduct must now prove specific
intent to deceive the patent office and that
the information withheld from the patent
office would have prevented issuance if it
had not been withheld. Many heralded this
new standard as the end of the inequitableconduct doctrine. Indeed, one of the five
dissenters on the Federal Circuit said the
new approach “does not merely reform the
doctrine of inequitable conduct, but comes
close to abolishing it altogether.”2 On remand in Therasense, however, the
District Court applied the new standard and
found inequitable conduct again. The intent
prong was met because the decision not to
submit was knowing and deliberate and intent
was the “single most reasonable inference.”3
Wesley Overson is the head of the 160-attorney litigation department in
Morrison & Foerster’s San Francisco office. His practice focuses on patent
litigation and other commercial litigation involving complex issues. His clients
include international pharmaceutical and biotechnology organizations,
for which he has crafted winning strategies for both the courtroom and
arbitration proceedings.
The materiality prong was met because the
patent would not have issued were it not for
Abbott’s declarations regarding the earlier
application. Essentially, the court found that
the patent examiner would not have credited
Abbott’s declarations if he had seen what
Abbott had argued in Europe. The takeaway:
In the context of inconsistent statements in
different venues, inequitable conduct may be
harder to prove, but it is not dead.
Under Therasense, the mere occurrence of
inconsistent statements under your watch is
not enough to get you into trouble. Indeed,
Therasense confirmed that specific intent is
required to prove inequitable conduct: “In a
case involving nondisclosure of information,
clear and convincing evidence must show
that the applicant made a deliberate decision
to withhold a known material reference.”4
But what should you do if you become aware
of inconsistent statements on material
matters? Can intent be inferred if you stay
silent? It could be, if the surrounding facts
and circumstances suggest that is the most
reasonable inference. Here are five ways to
make that inference less likely to happen:
Disclose inconsistent statements —
and better late than never.
When
inconsistencies happen, disclose them.
Don’t be tempted not to disclose. In today’s
electronic environment, inconsistencies are
not that hard to find, and you should count
on opposing counsel in litigation finding
them. It’s not worth risking your intellectual
property and your career. Simply disclose the
statement and do your best to argue around
it. Although it is best to disclose inconsistent
statements during prosecution, under new
provisions of the America Invents Act, you
may disclose them much later — even after
a patent issues.5
Watch your emails. Be aware of how your
company’s communications will look later
on. Train your people about the standards
for inequitable conduct and educate them
on how their informal, loosely worded emails
might look to the court someday. JUNE 12, 2013
n
VOLUME 20
n
ISSUE 4 | 7
Don’t rely on the attorney-client privilege.
There is no guarantee that the privilege will
be upheld if you get into an inequitableconduct trial. These trials are privilege
minefields. There is a risk of the crime/fraud
exception, and there are often unintentional
waivers. And your counsel may want to
waive the privilege if the record is clean, but
may not be able to if there are problematic
communications. Don’t assume that the
attorney-client privilege will protect you from
trouble.
Tell the truth. If people in your company are
accused of having specific intent to deceive,
your witnesses should not attempt to craft
after-the-fact rationales. They should just be
honest. If your witnesses do not remember
the details of what happened, they should
just stick to that. If the patent prosecutors
knew of the withheld statements, but were
busy and never managed to submit them,
they shouldn’t try to hide that. Inequitable
conduct requires a deliberate decision to
withhold information.
“[C]arelessness,
lack of attention, poor docketing or crossreferencing, or anything else that might
be considered negligent or even grossly
negligent” will not suffice. 1st Media LLC v.
Elec. Arts, 694 F.3d 1367, 1374-1375 (Fed.
Cir. 2012). The Therasense standard for
intent will be hard to meet absent a witness
who is perceived to be lying, so made-up
explanations pose a much greater risk than
truthful statements by a witness who was
forgetful or negligent.
Take it seriously. Weak inequitable-conduct
theories were included in so many cases that
lawyers started treating the defense as just
an annoying side show. While they were right
most of the time, it is better to prepare your
case with vigor than to find out at trial that
you guessed wrong.
While inequitable conduct has become
very difficult to prove, it has not gone away.
Inequitable conduct should still be in the
back of your mind when prosecuting patents
in multiple jurisdictions, and it should move
to the front of your mind when you see that
your company has taken conflicting positions
in different venues on material issues.
Hopefully, the five suggestions above will
help you to steer clear of trouble. WJ
NOTES
Therasense Inc. v. Becton, Dickinson & Co.,
649 F.3d 1276 (Fed. Cir. 2011).
1
2
Id. at 1304.
Therasense Inc. v. Becton, Dickinson & Co.,
864 F. Supp. 2d 856, 867 (N.D. Cal. 2012).
3
Therasense, 649 F.3d at 1290 (quoting
Molins Plc v. Textron Inc., 48 F.3d 1172, 1181 (Fed.
Cir. 1995)).
4
See Leahy-Smith America Invents Act, 35
U.S.C. § 257 (2011) (providing for supplemental
examination).
5
Expert Intelligence Reports give you the information
you need to evaluate your opposing counsel’s expert
witness. In every Expert Intelligence Report you
request, you’ll find comprehensive, logically organized
documentation of an expert’s background and
performance as an expert witness: transcripts,
depositions, challenges, resumes, publications, news
stories, social media profiles – even hard-to-get expert
testimony exhibits from dockets.
In other words, you’ll find valuable information to help
you successfully cross-examine, challenge, or even
impeach your adversary’s expert witness.
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8 | WESTLAW JOURNAL
n
CERTIORARI
Justices agree to hear Lexmark
false-advertising case
(Reuters) – The U.S. Supreme Court agreed June 3 to hear printer manufacturer Lexmark International Inc.’s appeal of a long-running dispute with Static
Control Components Inc. over replacement toner cartridges.
Lexmark International Inc. v. Static Control
Components Inc., No. 12-873, cert. granted
(U.S. June 3, 2013).
WESTLAW JOURNAL
PRODUCTS
LIABILITY
Lexmark asked the justices to review an
appeals court ruling that said Static had
standing to make false-advertising claims
against it.
Static claims that Lexmark falsely advertised
by advising customers that Static’s chips
REUTERS/Jonathan Ernst
Lexmark International says Static Control Components
does not have standing to make its claim because only direct
competitors can make false-advertising allegations.
infringed
property.
upon
Lexmark’s
intellectual
The two companies have been locked in
litigation for over a decade. Lexmark,
in an effort to prevent the practice of
other companies selling refilled, alreadyused Lexmark cartridges, started adding
microchips to its cartridges so that Lexmark
printers would not work with cartridges
without the technology.
infringement and the judge presiding over
the case dismissed Static’s claims. Static
Control Components v. Lexmark Int’l, 749 F.
Supp. 2d 542 (E.D. Ky. 2010).
The Cincinnati-based 6th U.S. Circuit Court
of Appeals upheld all the lower court’s
decisions except for its dismissal of the
false-advertising claims.
Static Control
Components v. Lexmark Int’l, 697 F.3d 387
(6th Cir. 2012).
Static was able to replicate the microchip
technology and subsequently sold chips
to companies that wanted to sell refilled
cartridges for Lexmark printers.
Lexmark says Static does not have standing
to make its claim because only direct
competitors can make false-advertising
allegations.
Lexmark sued, alleging copyright violations.
Static responded by filing its own suit alleging
antitrust and false-advertising claims.
Oral arguments and a decision are due in the
Supreme Court’s next term, which starts in
October and ends in June 2014. WJ
The only issue left in the case is the falseadvertising question after a jury found
that Static had not induced copyright
(Reporting by Lawrence Hurley; editing by
Howard Goller, James Dalgleish and Sofina
Mirza-Reid)
It’s a dangerous world
out there, for both the
manufacturers and
marketers of hundreds of
thousands of products and
for the individuals who buy
and use those products
trusting that they will be
safe. If your clients include
manufacturers, distributors,
retailers and users of the
many consumer products in
the news today because of
unexpected deaths, injuries,
or performance failures, you
will find this reporter useful.
You will find ongoing, detail
coverage of cases involving
statutes of limitations,
product liability insurance,
the duty to warn, punitive
damages, market share
liability, alternative design
theories, and new items.
Call your West representative for more information
about our print and online subscription packages,
or call 800.328.9352 to subscribe.
JUNE 12, 2013
n
VOLUME 20
n
ISSUE 4 | 9
Justin Bieber, Usher sued for $10 million
for copyright infringement
Two musical artists have filed a federal lawsuit alleging a popular song
by Justin Bieber and Usher was “clearly copied” from a version
the pair already recorded.
Copeland et al v. Bieber et al., No. 13-CV-00246, complaint filed
(E.D. Va. May 2, 2013).
In a complaint filed in the U.S. District Court for the Eastern District
of Virginia, Devin Copeland and Mareio Overton allege Justin Bieber’s
hit single “Somebody to Love” was actually a song they wrote and
recorded in 2008.
Copeland, who performs under the stage name De Rico, is an R&B
singer who often collaborates with Overton, a songwriter, the complaint
says.
Copeland and Overton seek $10 million in damages in the suit filed
May 2. They claim to have written a song called “Somebody to Love” in
March 2008 that is substantially similar to the single that Bieber and
Usher released under the same title in 2010.
According to the complaint, in 2008 Copeland allegedly recorded
an original album featuring songs written by Overton, including
“Somebody to Love.” Copeland and Overton claim to own the rights to
the song, and they obtained a copyright registration for the lyrics from
the U.S. Copyright Office in October 2008.
The complaint says Copeland and Overton met a series of people who
eventually introduced them to Usher’s mother, Jonetta Patton, whom
the plaintiffs call Usher’s “on-again, off-again manager.” The two men
claim they were told multiple times that their music, including the song
“Somebody to Love,” had been given to Usher.
The plaintiffs allege Patton called them in January 2009 and told them
that she and Usher had listened to their song and were interested in
having Copeland re-record the track and go on tour with Usher. After
that phone call, the pair never heard from Usher or his representatives
again, according to the complaint.
In 2010, with the help of Usher, Bieber released his album “My World
2.0,” featuring the song “Somebody to Love.” Copeland and Overton
10 | WESTLAW JOURNAL
n
In the lawsuit, two plaintiffs cite almost 20 similarities between their version of the song “Somebody
to Love” and the version released by Usher (L) and Justin Bieber (R).
cite almost 20 congruencies between their version and the version
released by Bieber and Usher. Among the similarities, they claim, both
versions have “nearly identical” time values and opening lyrics.
Absent copying, the complaint says, it would be virtually impossible for
the two songs to have so many technical similarities.
The plaintiffs seek monetary damages of $10 million and a permanent
injunction against the defendants. WJ
Attorneys:
Plaintiffs: Duncan G. Byers and Jeffrey D. Wilson, Byers Law Group, Norfolk,
Va.
Singer accuses country music stars
of copyright infringement
A singer/songwriter has filed a Tennessee federal court lawsuit accusing
country music superstars Brad Paisley and Carrie Underwood of copyright
infringement for allegedly reproducing her song “Remind Me.”
Bowen v. Paisley et al., No. 3:13-CV-00414,
complaint filed (M.D. Tenn., Nashville Div.
May 1, 2013)
Amy Elizabeth Connor Bowen, also known
as Lizza Connor, says she wrote the song in
2007. Paisley and Underwood released it as
a duet in 2011.
According to the complaint, filed May 1 in
the U.S. District Court for the Middle District
of Tennessee, Bowen obtained copyright
registrations for the song, music and lyrics in
October 2008.
Bowen says she met songwriters Kelley
Lovelace and Charles C. DuBois at a 14-week
country music songwriting workshop
she attended in 2008 in Nashville, Tenn.
According to the complaint, Bowen
performed her song “Remind Me” on multiple
occasions at the workshop, including a live
performance for Lovelace, who was her
adviser during the workshop.
The suit lists 19 additional instances where
Bowen purportedly played the song at
performances in and around Nashville from
2008 to 2011.
The complaint alleges Paisley and
Underwood recorded a version of “Remind
Me,” substantially similar to the one written
by Bowen, in February 2011 and released
it that May. The released version allegedly
attributes the writing of the song to DuBois
and Lovelace, who are named as defendants
in the suit.
The company alleges three counts of
copyright infringement under the Copyright
Act of 1976, 17 U.S.C. § 101.
Bowen seeks a declaratory judgment that
she is the owner of the song “Remind Me”
and an accounting of the profits made by
Paisley, Underwood, DuBois and Lovelace,
estimated to be more than $10 million, which
Bowen says belong exclusively to her. WJ
Attorneys:
Plaintiff: Kenneth L. Connor and C. Caleb Connor,
Connor & Connor, Aiken, S.C.
REUTERS/Tami Chappell
Brad Paisley and Carrie Underwood perform “Remind Me” at the 45th Country Music Association Awards in Nashville, Tenn., in 2011.
The song is at the center of a copyright infringement lawsuit.
JUNE 12, 2013
n
VOLUME 20
n
ISSUE 4 | 11
PATENTS
Obama takes action to curb frivolous patent lawsuits
(Reuters) – President Barack Obama took steps June 4 intended to curb lawsuits brought by companies, disparagingly
called “patent trolls,” that make or sell nothing but specialize in suing others for infringement, and he asked for new
federal regulations and action from Congress.
The offensive — announced ahead of an
Obama fundraising trip to Silicon Valley in
California — came as U.S. lawmakers and
courts also are looking for ways to reduce the
number of unwarranted patent lawsuits.
according to Reines, a lawyer with the firm
Weil Gotshal & Manges.
Two companies often accused of being
trolls are Eolas Technologies and Innovatio
IP Ventures LLC. Both argued June 4 that
allowing companies that specialize in legal
strategy to handle infringement lawsuits
makes sense.
Such lawsuits have ballooned in recent years,
particularly in the technology sector, from
companies that buy and license patents from
others, including individual inventors.
Critics say those patent portfolios are
assembled as a springboard to litigation;
many firms argue they are providing a service
to inventors, or protecting against the loss
of licensing fees that users of the patents
should pay.
Cisco Systems Inc., Apple Inc., Google Inc.
and other big technology companies have
been pushing for legislation that would
reduce the number of times each year that
they are sued for infringement.
Among other steps, the White House called
on Congress to pass legislation to make it
easier for a federal judge to award legal fees
to the winner of a patent case if the judge
deems the lawsuit abusive.
It also asked lawmakers to make it harder for
companies to convince the U.S. International
Trade Commission to ban sales of products
made with technology that infringes on
a patent. Currently, the ITC has a lower
standard for ordering an injunction than does
a U.S. district court.
The disparity has led to a tidal wave of patent
infringement complaints filed at the ITC.
Obama asked lawmakers to require
companies that sue for infringement to have
updated ownership information on file with
the U.S. Patent and Trademark Office. He
also urged the patent office, part of the U.S.
Department of Commerce, to write a similar
regulation.
The actions were aimed at improving
incentives for high-tech innovation, a major
driver of economic growth, the White House
said.
n
REUTERS/Jason Reed
“Stopping this drain on the
American economy will
require swift legislative
action, and we are
encouraged by the attention
the issue is receiving in
recent weeks,” White House
spokesman Jay Carney said
in a statement.
“Stopping this drain on the American
economy will require swift legislative action,
and we are encouraged by the attention the
issue is receiving in recent weeks,” White
House spokesman Jay Carney said in a
statement.
Companies specializing in patent litigation
filed 2,921 infringement lawsuits in 2011,
the latest figures available, 62 percent of all
such cases filed, Colleen Chien, who teaches
patent law at Santa Clara University Law
School, said in a blog post for PatentlyO.
Allowing judges to decide that certain
lawsuits are abusive and requiring losers
to pay the winners’ legal fees would be key
steps toward killing frivolous lawsuits, said
Ed Reines, a member of an advisory panel
for the U.S. Court of Appeals for the Federal
Circuit, which hears most patent appeals.
Another important step would be to reform
the ITC so companies cannot get a sales
injunction not available in district courts,
“The idea that because you’re not actually
making things, you shouldn’t be able to get
a return on your investment, I think that’s
wrong,” said chief executive Mark Swords of
Eolas, which has sued companies ranging
from Facebook to Walt Disney over patents
for interactive technology.
Matthew McAndrews, who represents
Innovatio, urged lawmakers to consider
requiring companies that fight infringement
lawsuits and lose to pay the plaintiff’s legal
fees.
“Why shouldn’t there be a balanced provision
that says in the case of a large entity willfully
infringing a non-practicing entity that all
of the fees should be shifted in that case?”
McAndrews said. “Who gets to define an
abusive patent litigation claim? It (Obama’s
proposal) places way too much emphasis on
non-practicing entity.”
LEGISLATION BREWING,
COURTS AT WORK
Congress already is working on a variety of
bills. The heads of the judiciary committees
in the Senate and House of Representatives
— Democratic Sen. Patrick Leahy of Vermont
and Republican Rep. Robert Goodlatte of
Virginia — have put forward a draft bill.
Their measure would improve access to
information about who owns patents, reduce
discovery burdens in lawsuits and make other
changes to enable judges to identify abusive
cases early in the process and, presumably,
dismiss them.
The bipartisan proposal, once finalized, is
considered to have a good chance to move
through Congress.
Another bill — introduced by Reps. Peter
DeFazio, an Oregon Democrat, and Jason
Chaffetz, a Utah Republican — would require
certain plaintiffs to pay all legal fees if they
sue for patent infringement and lose.
“The litigation abuse comes when a company
is asserting a patent with a minimal value …
but they’re asserting it for billions of dollars,”
Rader told Reuters in an interview. “That
disproportionality is an abuse of the system.”
And efforts are under way in the courts to rein
in abuses.
Rader’s plan calls for courts to restrict pretrial
discovery — gathering evidence in a case — to
key terms and key people and would limit the
number of patents in each case.
Randall Rader, who has been on the U.S.
Court of Appeals for the Federal Circuit since
1990 and became chief judge in 2010, has
circulated a four-point plan to stem abusive
patent litigation. The plan overlaps with
some of the new White House proposals and
some of the planned legislation.
It also calls for courts to evaluate the value
of any infringement early on and dispatch
smaller cases quickly, and to consider making
plaintiffs pay the legal fees of defendants if
the judge concludes that the original lawsuit
was unfounded.
The court within weeks will formally begin an
effort to cut the number of patents in each
case, Rader said. The other two issues are
down the road, Rader added. WJ
(Reporting by Diane Bartz; additional
reporting by Sarah McBride in San Francisco,
and Mark Felsenthal and Roberta Rampton;
editing by Ros Krasny, Will Dunham and
Cynthia Osterman)
Flea market owner must pay $5 million
for contributory infringement
In a case of first impression, the 6th U.S. Circuit Court of Appeals has affirmed that a Tennessee flea market operator
must pay $5 million in damages and costs for contributory infringement of trademarks owned by high-end accessory
designer Coach.
Coach Inc. et al. v. Goodfellow, No. 125666, 2013 WL 2364091 (6th Cir. May 31,
2013).
A three-judge appellate panel affirmed the
judgment on damages awarded by a jury in
the U.S. District Court for the Western District
of Tennessee against Frederick Goodfellow,
owner of the Southwest Flea Market.
The jury also awarded Coach $187,000 in
attorney fees and costs.
“We don’t feel that the 6th Circuit gave
Mr. Goodfellow enough credit for doing the
best he could to control a problem at his flea
market with people who came in to sell items
with criminal intent,” his attorney, Stephen
Leffler of Memphis, Tenn., said in an email.
“Mr. Goodfellow went above and beyond
what many store owners do to protect the
public and yet those same store owners are
absolved of negligence for a third party’s
injury,” Leffler added. “He did everything
he could to solve Coach’s problem with the
limited resources he had on hand. Coach
did nothing to work with him to solve
the problem and the thanks he gets is a
$5 million judgment for Coach.”
Leffler said no decision has been made about
an appeal.
According to the appellate court’s opinion,
Coach Inc. notified Goodfellow in January
2010 that counterfeit Coach products were
being sold at his flea market and demanded
that all sales of the fake goods cease.
In February 2012 the District Court partially
granted the company’s motion for summary
judgment on the issue of liability, finding
Goodfellow contributorily liable in the sale of
the counterfeit products.
The Shelby County district attorney’s office
sent another letter two months later, advising
Goodfellow that the counterfeit sales were
continuing and warning him that he was
willfully disregarding the law, the opinion
says.
Following the establishment of liability, the
court conducted a jury trial to determine
damages.
Law enforcement officers raided the flea
market April 23, 2010, and seized counterfeit
Coach products.
Coach sued Goodfellow that June. According
to the opinion, an investigator hired by the
company discovered that sales of counterfeit
goods continued at the flea market even after
the suit was filed.
Another raid in June 2011 resulted in the
seizure of more than 4,600 counterfeit Coach
products, and the flea market was closed, the
opinion says.
In its complaint, Coach alleged that
Goodfellow was liable for the sale of the
counterfeit products at his flea market in
violation of federal trademark law.
The jury concluded that Goodfellow willfully
infringed 21 of Coach’s marks, and awarded
the company $240,000 in damages per
infringed mark — more than $5 million.
The judge determined that the case was
“exceptional,” because Goodfellow had not
responded to Coach’s liability motion and
the jury had found his infringement willful,
entitling Coach to $187,000 in attorney fees.
Goodfellow appealed to the 6th Circuit,
contending that the Lanham Act, 15 U.S.C.
§ 1114, does not provide for contributory
liability for trademark infringement.
The appeals court noted that Goodfellow’s
liability was established on the merits, which
he never challenged.
Although the panel said it does not ordinarily
address issues for the first time on appeal, it
decided to take the opportunity to provide
JUNE 12, 2013
n
VOLUME 20
n
ISSUE 4 | 13
WESTLAW JOURNAL
CLASS ACTION
Coach Inc. notified defendant Frederick Goodfellow in January 2010 that counterfeit Coach products were being sold at his flea market
and demanded that all sales of the fake goods cease. A Coach handbag is seen here.
guidance on
infringement.
contributory
trademark
The 6th Circuit explained that contributory
liability for trademark infringement is a form
of secondary liability first recognized by the
U.S. Supreme Court in Inwood Laboratories
Inc. et al. v. Ives Laboratories et al., 456 U.S.
844 (1982).
In Inwood the Supreme Court said liability
under the Lanham Act may be imposed
on those who facilitate direct trademark
infringement.
According to the 6th Circuit, courts have
applied Inwood to flea market operators,
holding them liable for contributory
infringement, if they are “willfully blind”
to infringement by deliberately failing to
investigate suspected infringing activity and
by allowing the infringing vendors to use flea
market resources.
The appeals court said Goodfellow had
actual knowledge of the infringing activity as
early as January 2010, when he received the
first letter from Coach, followed by the district
attorney’s letter and the ensuing police raids.
According to the 6th Circuit’s opinion,
Goodfellow did not dispute that he knew
of the infringing activity, but argued that
he took reasonable remedial measures by
notifying vendors that selling counterfeit
goods was prohibited.
Goodfellow’s argument failed to undermine
the District Court’s conclusion that he
engaged in “ostrich-like” practices, the panel
said.
The appeals court held that Goodfellow
was properly held liable for contributory
trademark infringement because he knew or
had reason to know of the infringing activities
but continued to facilitate them.
It affirmed the attorney fee award, saying
Goodfellow’s willful ignorance was sufficient
to make it an exceptional case. WJ
Attorneys:
Appellant: Stephen R. Leffler, Leffler Law Office,
Memphis, Tenn.
This reporter covers the
proliferation of the class
action lawsuit in numerous
topic areas at the federal,
state, and appeals court
levels. Topics covered
include consumer fraud,
securities fraud, products
liability, automotives,
asbestos, pharmaceuticals,
tobacco, toxic chemicals
and hazardous waste,
medical devices, aviation,
and employment claims.
Also covered is legislation,
such as the 2005 Class
Action Fairness Act and
California’s Proposition
64, and any new federal
and state legislative
developments and the
effects these have on class
action litigation.
Appellees: J. Britt Phillips, Sutter O’Connell Co.,
Franklin, Tenn.
Opinion: 2013 WL 2364091
See Document Section B (P. 42) for the opinion.
Call your West representative for more information
about our print and online subscription packages,
or call 800.328.9352 to subscribe.
n
Philip Morris accuses Bronx delis of selling fake Marlboros
Philip Morris USA has accused a pair of New York City cigarette retailers of selling knockoff Marlboro-brand cigarettes
in violation of federal and state trademark laws.
of the difference in quality. Consumers
might also question whether Philip Morris
is sponsoring or approving of the knockoff
cigarettes, the complaint says.
Philip Morris USA Inc. v. 3473 Quick Stop
Inc. et al., No. 13 CIV 2667, complaint filed
(S.D.N.Y. Apr. 23, 2013).
The suit, filed in the U.S. District Court for the
Southern District of New York, says the fake
cigarettes are of inferior quality and that their
continued sale is likely to cause consumer
confusion, deception and irreparable injury.
Philip Morris says people
who buy the counterfeit
cigarettes “are likely
to be confused and/or
disappointed” because of
the difference in quality.
Philip Morris sued two delis located in the
Bronx: 3473 Quick Stop Inc., doing business
as 3473 Quick Stop Deli, and Kamal Deli
Grocery Corp., doing business as G&J Deli
Grocery. The company says the two retailers
“willfully sold cigarettes in packaging that
bears spurious marks that are either identical
to or substantially indistinguishable from the
Marlboro trademarks.”
Philip Morris has owned its Marlboro
trademark for more than 100 years and has
made a significant investment in advertising
and promoting the brand, the suit says.
The company says it hired investigators
in February to buy cigarettes from Quick
Stop and G&J Deli. The cigarettes were
determined to be counterfeit, the suit says.
The delis are still selling fake Marlboros,
according to the suit.
Philip Morris maintains that people who
purchase the counterfeit cigarettes “are likely
to be confused and/or disappointed” because
Because of the defendants’ actions, Philip
Morris is losing “the enormous goodwill” it
has created in its Marlboro-brand products
and losing profits from lost sales of authentic
products, the suit says.
Philip Morris asserts claims for federal
trademark infringement in violation of the
Lanham Act, 15 U.S.C. § 1114, and unfair
competition and trademark infringement
under state law.
The company seeks injunctive relief barring
the defendants from selling counterfeit
Marlboro products, as well as an award of
unspecified damages, costs and attorney
fees. WJ
Attorney:
Plaintiff: Laura W. Tejada, Arnold & Porter,
New York
WESTLAW JOURNAL EMPLOYMENT
This publication provides information about the latest
developments in employment-related lawsuits. It covers
such issues as the Americans with Disabilities Act, the
Rehabilitation Act, the Age Discrimination in Employment
Act, the Older Workers Benefit Protection Act, Title VII,
sexual harassment, the Family and Medical Leave Act,
labor issues, whistleblower, the Uniformed Services
Employment and Reemployment Rights Act, civil rights
violations, privacy, and arbitration.
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JUNE 12, 2013
n
VOLUME 20
n
ISSUE 4 | 15
Trademark suit failed to show video game title
infringed company name
A federal judge in Michigan has ruled that British computer game company Rebellion Developments’ lawsuit alleging
a video game’s use of the word “Rebellion” in the title infringed the company’s trademark failed to meet infringement
standards for “expressive works.”
Rebellion Developments Ltd. et al. v.
Stardock Entertainment Inc. et al., No. 1212805, 2013 WL 1944888 (E.D. Mich.,
S. Div. May 9, 2013)
U.S. District Judge Victoria A. Roberts of
the Eastern District of Michigan dismissed
the suit, finding the plaintiffs failed to show
that the use of the word “rebellion” had “no
artistic relevance” to the video game or that it
“explicitly misleads” consumers as to the true
source of the game.
The suit did not satisfy either of two tests
that the 2nd U.S. Circuit Court of Appeals
established in Rogers v. Grimaldi, 875 F.2d
994 (2d Cir. 1989), the judge said.
Rebellion Developments and founders
Jason and Christopher Kingsley sued video
game developer Ironclad Games Corp. and
distributor Stardock Entertainment Inc.,
alleging the companies violated the Lanham
Act, 15 U.S.C. § 1051, by using the word
“rebellion” in the game title “Sins of a Solar
Empire: Rebellion.”
trademark the video game title and they used
the word on packaging and in advertisements
to draw public attention to it.
Judge Roberts acknowledged that Rebellion
Developments owns the mark for the word
“rebellion” for use with entertainment and
video games, but she said the suit cannot
survive a motion to dismiss because the claims
did not satisfy either of the two requirements
established in Rogers.
Judge Roberts acknowledged there was
some evidence of confusion between the
video game title and the company Rebellion
Developments, but she found Rogers to be
the controlling law in this case because video
games have been established as “expressive
works” within the meaning of the Lanham Act.
According to the judge’s order, the plaintiffs
argued that the court should follow the
“likelihood of confusion” standard for showing
trademark infringement that the 6th Circuit
established in Wynn Oil Co. v. Thomas, 839
F.2d 1183 (6th Cir. 1988).
The judge agreed with Stardock Entertainment’s
and Ironclad Games’ argument that the
standards for trademark infringement must be
altered to provide First Amendment protection
to titles of expressive work.
Rebellion Developments claimed that the
defendants’ use of the word “rebellion” is
likely to confuse consumers because the
defendant companies filed an application to
According to the order, the first prong of the
Rogers test permits the use of a trademarked
word in the title of an expressive work where it
has artistic relevance to the underlying work.
The plaintiffs failed to show there was no
artistic relevance, the judge said.
Because the video game involves players
choosing to be on the side of the “loyalists”
or the “rebels,” the use of the word “rebellion”
in the title is relevant to the work, the judge
explained. The order notes the level of artistic
relevance necessary under the Rogers test is
very low, and other courts have found that it
simply “must be above zero.”
The second prong of the Rogers test
requires plaintiffs to show that a defendant
willfully infringed a trademark in an attempt
to capitalize on the trademark owner’s
reputation.
Judge
Roberts
found
no
“overt
misrepresentation” by Stardock or Ironclad.
Since Rebellion Developments did not satisfy
either prong of the Rogers test, the judge said,
the defendants were entitled to dismissal of
all claims.
”Defendants’ use of rebellion is expressive
speech and is protected under the First
Amendment,” she said. WJ
Courtesy of www.sinsofasolarempire.com
The lawsuit involves the video game “Sins of a Solar Empire: Rebellion.”
n
Order and opinion: 2013 WL 1944888
Reynolds says online e-cig vendor stole Eclipse trademark
Reynolds Innovations Inc. alleges in a federal lawsuit that a company selling electronic cigarettes online has ripped off
its trademark for Eclipse-brand “low smoke” cigarettes.
Reynolds Innovations Inc. v. Snowcap
Distributing Corp. et al., No. 1:13-cv-383,
complaint filed (M.D.N.C. May 6, 2013).
The suit filed in the U.S. District Court
for the Middle District of North Carolina
accuses Snowcap Distributing Corp. of using
trademarks identical to Reynolds’ Eclipse
mark.
Snowcap is based in Issaquah, Wash., and
sells electronic cigarettes and accessories
www.vaporpro.com, the suit says.
Electronic cigarettes, or e-cigarettes, are an
alternative to traditional tobacco cigarettes.
They are powered by batteries and use
vapors to deliver nicotine to smokers.
Reynolds says it started selling Eclipse
cigarettes as early as 1996. The company
markets the product as low-smoke cigarettes
and says it owns the Eclipse registration and
mark.
Because of Reynolds’ promotional efforts,
“consumers of tobacco products recognize
the Eclipse mark as a symbol of the highest
quality of tobacco products and associate
and identify the Eclipse mark with Reynolds
or with a single source,” the complaint says.
Reynolds says the
defendant acted
intentionally to benefit from
the goodwill associated
with its Eclipse mark.
The complaint stresses that Reynolds has
not authorized Snowcap to use the Eclipse
trademark.
The suit asserts causes of action for trademark
infringement and unfair competition under
the Lanham Act, 15 U.S.C. § 1114, and unfair
and deceptive trade practices and commonlaw trademark infringement under North
Carolina law.
Snowcap’s use of the Eclipse mark to sell
its e-cigarette products is “likely to cause
confusion, mistake or deception among
consumers as to the source, origin or
sponsorship of such products,” the suit says.
Reynolds asserts that Snowcap acted
“intentionally” to benefit from the goodwill
associated with the Eclipse mark.
The company seeks injunctive relief barring
Snowcap from using the Eclipse mark, actual
and punitive damages, and attorney fees. WJ
Attorney:
Plaintiff: William M. Bryner, Kilpatrick
Townsend & Stockton, Winston-Salem. N.C.
WestlaW journal insurance coverage
andrews Insurance Coverage litigation reporter gives you
a weekly update of insurance litigation, legislation and
industry-wide information. It surveys significant case law
developments in emerging areas of insurance coverage
litigation, including matters involving environmental issues,
e-commerce and technology, lead paint, indoor air quality
and other toxic exposure, professional liability, bad faith
and employment.
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JUNE 12, 2013
n
VOLUME 20
n
ISSUE 4 | 17
TRADE SECRETS
Panel urges tougher U.S. response to trade secret theft
(Reuters) – Theft of trade secrets, chiefly by China, costs the U.S. economy $300 billion a year and must be fought with
sanctions as tough as those used against terrorism and drug trafficking, an advisory panel said May 22.
The Commission on the Theft of American
Intellectual Property said U.S. responses so
far, using the World Trade Organization and
government talks, have not kept up with the
fast growth of trade secret theft by cyber and
traditional methods.
“The scope of the problem requires stronger
action, involving swifter and more stringent
penalties for IP theft,” said the nonpartisan
commission’s report, compiled by former
senior government, military and industry
leaders.
The panel recommends making the
president’s national security adviser the chief
policy coordinator of an all-out U.S. drive
to protect intellectual property and punish
theft.
Intellectual property thieves should be hit
with a mix of banking sanctions, bans on
imports and blacklisting in financial markets,
said the commission, which has shared
its 89-page report with Congress and the
Obama administration.
“The banking system has a very welldeveloped system of denying the ability to
change money for companies and other
organizations that either support terrorism
or are involved in drug activities,” said former
U.S. Director of National Intelligence Dennis
Blair, a co-chairman of the commission.
“It’s a killer sanction for a company that’s
attempting to go international,” he told
reporters in Washington.
CHINA STANDS OUT
China accounts for between 50 percent and
80 percent of intellectual property theft,
said the report, which also cites India and
Russia as other problem countries, based on
data from customs seizures and other trade
figures.
n
“National industrial policy goals in China
encourage IP theft, and an extraordinary
number of Chinese in business and
government entities are engaged in this
practice,” it said.
President Barack Obama could help the
issue “get traction” by raising it in his meeting
with his Chinese counterpart, Xi Jinping,
in California in early June, said former U.S.
Ambassador to China Jon Huntsman, also a
commission co-chairman.
as “the nuclear option” of authorizing
counter attacks against hackers, citing legal
questions and fear of collateral damage.
The report recommends committing more
resources to investigating and prosecuting
cyber-theft of trade secrets, but says
intellectual property stolen via the Internet is
only a portion of theft.
“Much of it occurs the old-fashioned way,”
through copied or stolen hard drives,
bribing or planting of employees, tapping of
Intellectual property thieves should be hit with
a mix of banking sanctions, bans on imports and blacklisting
in financial markets, the commission said.
“The president sets the priorities for the
U.S.-China relationship, and this clearly
would have to be at the top of our economic
agenda,” he said.
Leaving it to bilateral economic talks like
July’s Strategic and Economic Dialogue
would continue unproductive “jaw boning”
while the problem gets worse, Huntsman
added.
MOST THEFT HAPPENS INSIDE U.S.
Other recommended responses include
immediate confiscation of goods containing
stolen intellectual property and making
respect for IP rights a condition for investing
or listing shares in the United States.
The commission recommends beefed-up
protections to make U.S. data less vulnerable
to hackers, as well as enhanced measures
such as “water marking” or “beaconing” that
allow companies to identify stolen files and
make them inoperable.
But it stops short of calling for what panel
member Craig Barrett, former chairman
and chief executive of Intel Corp., described
phones, pirating of software and the reverse
engineering of products, it said.
While credible reports have emerged
of Chinese army hackers raiding U.S.
government and industry computers, the
report said, “In reality, most IP theft is
committed within American offices, factories,
and even neighborhoods and homes.”
Beyond the $300 billion in economic losses,
equal to the annual value of U.S. exports to
Asia, the United States loses some 2.1 million
jobs each year to IP theft, Huntsman said.
Intellectual property theft through actions
ranging from software piracy to patent or
trademark infringement to cyber-espionage
also depresses research and development
spending and stymies future innovation, the
commission said. WJ
The report is available at http://www.
ipcommission.org/report/IP_Commission_
Report_052213.pdf.
(Reporting by Paul Eckert; editing by Philip
Barbara)
Oprah Winfrey
CONTINUED FROM PAGE 1
Kelly-Brown’s
trademarked
constituted fair use.
phrase
“The fair-use defense cannot be used to
undermine the value of small businesses’
federal trademark rights to the unfair
advantage of large corporations,” she added.
U.S. District Judge Paul A. Crotty of the
Southern District of New York granted
the dismissal motion, concluding that the
defendants used the phrase for the nontrademarked purpose of describing the
contents of the magazine and the planned
campaign’s theme.
Counsel for the defendants did not respond
to a request for comment regarding the
decision.
Since the defendants were using the phrase
in its descriptive sense, they could not be said
to be using it in bad faith, Judge Crotty held.
According to the appellate court’s opinion,
Kelly-Brown owns Own Your Power
Communications Inc., a multimedia
motivational services business.
Kelly-Brown appealed, and a three-judge
panel of the 2nd Circuit concluded the
defendants had not shown fair use of the
mark.
Lawrence Kolaras of the PLK Law Group in
Hillsborough, N.J., said in a statement.
The lawsuit alleged that the prominence of the phrase
“Own Your Power” in Oprah Winfrey’s magazine
was evidence that she and her partners were trying
to link it to Winfrey’s own powerful brand.
She hosts a radio show, holds conferences
and retreats, and writes a blog under her
federally registered “Own Your Power”
trademark.
Kelly-Brown sued Winfrey and her companies
in July 2011 over their use of the phrase “Own
Your Power” to promote a self-awareness
and motivational campaign in large, bold
letters on the cover of the October 2010 issue
of Winfrey’s O magazine.
Magazine publisher Hearst Corp. and several
corporate sponsors involved with an “Own
Your Power” event held in September 2010,
including Wells Fargo & Co., Estee Lauder,
Clinique Laboratories and Chico’s, also were
named as defendants.
Kelly-Brown said her registered trademark
would have been evident had Winfrey
searched the register of the U.S. Patent and
Trademark Office. Kelly-Brown claimed she
was irreparably harmed by Winfrey’s alleged
infringement.
The lawsuit alleged that the prominence
of the phrase in O magazine was evidence
that Winfrey and her partners were trying to
usurp Kelly-Brown’s trademark and link it to
Winfrey’s own powerful brand.
The defendants moved to dismiss the
complaint, asserting that their use of
According to the panel’s opinion, in order for
the defendants to benefit from the fair-use
defense, they had to prove three elements:
that they used the “Own Your Power” phrase
other than as a mark, in a descriptive sense
and in good faith.
The appeals court said Kelly-Brown plausibly
alleged that Winfrey was trying to build a
new segment of her media empire around
the theme of “Own Your Power.”
From the magazine to the “Own Your Power”
event, referred to as the “first ever” of its kind,
and through repetition across various forms
of media, Kelly-Brown adequately showed
that the defendants were trying to create an
association between the phrase and Winfrey,
the panel said.
The 2nd Circuit rejected the defendants’
contention that they were using the “Own
Your Power” phrase in a descriptive manner.
The appeals court said the phrase did not
describe the content of the magazine.
Although the word “power” was repeatedly
used on the cover and in some articles, the
phrase itself was not used as a headline for a
particular article or content.
To show a lack of good faith, the panel said,
a plaintiff must show that a subsequent user
intended to create confusion as to the source
or sponsorship of the mark.
REUTERS/Andrew Kelly
Simone Kelly-Brown sued Oprah Winfrey, shown here, and
her companies in 2011 over their use of the phrase “Own
Your Power” to promote a self-awareness and motivational
campaign.
The defendants had argued that it was
implausible that someone as well-known as
Winfrey would attempt to trade on someone
as obscure as Kelly-Brown.
Kelly-Brown countered that she sufficiently
pleaded facts to show that the defendants
knew about her trademark and chose to
move ahead with the “Own Your Power”
campaign anyway.
Given the factual disputes, the appeals court
said the District Court erred in holding that
the defendants conclusively demonstrated
good faith and were entitled to dismissal.
The 2nd Circuit vacated the judgment of
dismissal and reinstated Kelly-Brown’s state
law claims, but affirmed the lower court’s
dismissal of her allegations of secondary
trademark infringement and counterfeiting.
WJ
Attorneys:
Plaintiff-appellant: Patricia Lawrence Kolaras,
PLK Law Group, Hillsborough, N.J.
Defendants-appellees: Jonathan R. Donnellan,
Hearst Corp., New York; Charles L. Babcock,
Jackson Walker LLP, Houston
Opinion: 2013 WL 2360999
See Document Section A (P. 25) for the opinion.
JUNE 12, 2013
n
VOLUME 20
n
ISSUE 4 | 19
RECENTLY FILED COMPLAINTS FROM WESTLAW COURT WIRE*
Westlaw Citation
2013 WL 2282868
Case Title
Ackourey v. Nandwani’s, No. 13-2881 (E.D. Pa. May 23, 2013)
Case Description
Other statutory actions
Factual Allegations
Defendant Nandwani’s infringed upon plaintiff Graphic Styles/Styles International’s
registered copyrights by reproducing and displaying on its website at least 59 separate
drawings of men’s and women’s fashion clothing styles, which were copied directly
from plaintiff’s copyrighted stylebooks without authorization. Copyright numbers at
issue: TX 2-240-703; TX 3-053-310; TX 3-446-818; TX 2-611-019; TX 5-037-124; TX
2-902-726; TX 731-329; A722732; TX 5-253-538; TX 4-621-545; TX 6-956-655; TX
6-956-762; TX 2-150-566; TX-3-229-071; TX 1-662-171; TX 1-838-271; TX 4-831-173;
TX 1-067-384 and TX 1-378-891.
Damages Synopsis
General, special, actual and statutory damages; disgorgement; injunctive relief; fees
and costs
Westlaw Citation
2013 WL 2256747
Case Title
Thermolife International v. Redefine Nutrition, No. 13-3630 (C.D. Cal. May 21, 2013)
Case Description
Patent
Factual Allegations
Defendant Redefine Nutrition infringed on plaintiff Thermolife International’s federally
registered Amino Acid Compounds patent with Registration No. 8,034,836 by shipping,
distributing and selling Max Pump branded dietary supplement products.
Damages Synopsis
Compensatory and punitive damages, declaratory relief, injunction, accounting,
interest, fees and costs
Westlaw Citation
2013 WL 2247134
Case Title
Chroma Makeup Studio LLC v. By Lee Tillett Inc., No. 13-3613 (C.D. Cal. May 20, 2013)
Case Description
Trademark
Factual Allegations
Defendant By Lee Tillett infringed on Chroma Makeup Studio’s common law trademarks
Chroma, Chroma Colour, Chroma Makeup Studio and Chroma Makeup Studio +C
Design marks by developing and marketing high-end cosmetic and beauty products
under a mark named Kroma with Registration No. 4079066. Plaintiff maintains that it
had gained prominence both nationally and internationally and that defendant’s use of
terms, names and symbols confusingly similar to that of plaintiff causes confusion and
deception to relevant consumers, in violation of the Lanham Act.
Damages Synopsis
Punitive and enhanced damages, order of cancellation of registration, destruction of
infringing products, accounting, interest, fees and costs
*Westlaw Court Wire is a Thomson Reuters news service that provides notice of new complaints filed in state and federal courts nationwide,
sometimes within minutes of the filing.
n
CASE AND DOCUMENT INDEX
Bowen v. Paisley et al., No. 3:13-CV-00414, complaint filed (M.D. Tenn., Nashville Div. May 1, 2013)............................................................................... 11
Coach Inc. et al. v. Goodfellow, No. 12-5666, 2013 WL 2364091 (6th Cir. May 31, 2013)...................................................................................................13
Document Section B......................................................................................................................................................................................................42
Copeland et al v. Bieber et al., No. 13-CV-00246, complaint filed (E.D. Va. May 2, 2013)................................................................................................. 10
Giant Eagle Inc. v. AstraZeneca LP et al., No. 13-cv-00658, complaint filed (W.D. Pa. May 8, 2013).................................................................................6
Kelly-Brown et al. v. Winfrey et al., No. 12-1207-cv, 2013 WL 2360999 (2d Cir. May 31, 2013).............................................................................................1
Document Section A.....................................................................................................................................................................................................25
Lexmark International Inc. v. Static Control Components Inc., No. 12-873, cert. granted (U.S. June 3, 2013).....................................................................9
Parts.com LLC v. Google Inc., No. 13-CV-1074, complaint filed (S.D. Cal. May 6, 2013)......................................................................................................6
Philip Morris USA Inc. v. 3473 Quick Stop Inc. et al., No. 13 CIV 2667, complaint filed (S.D.N.Y. Apr. 23, 2013)............................................................... 15
Probill Inc. et al. v. Cumbie Law Office Automation Consulting Inc. et al., No. 12-80821-CIV, 2013 WL 2158431
(S.D. Fla. May 17, 2013)..........................................................................................................................................................................................................6
Rebellion Developments Ltd. et al. v. Stardock Entertainment Inc. et al., No. 12-12805, 2013 WL 1944888
(E.D. Mich., S. Div. May 9, 2013).......................................................................................................................................................................................... 16
Reynolds Innovations Inc. v. Snowcap Distributing Corp. et al., No. 1:13-cv-383, complaint filed (M.D.N.C. May 6, 2013)...............................................17
JUNE 12, 2013
n
VOLUME 20
n
ISSUE 4 | 21

International Inconsistencies In Patent Prosecution

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